Insurance For medical malpractice (With Lewis Davies)

RPC Radio Hello, you're listening to Insurance Covered. Welcome to the podcast that covers anything and everything to do with insurance, coming up in this episode. Yeah, absolutely. We can preek you where at the end of the day, at the end of every claim to somebody who suffered pain or distress or hardship as a result of some injury on this foot of suffered. My name is Peter Mansfield and I'm a partner in the law firm RPC. In each episode, I'm joined by guests and we discuss the wonderful world of insurance. And this week, our guest is Louis Davis and our topic is Insurance for Medical Nile Practice. Louis started out as insurance career with the Ecclesiastical Insurance Group as the property and casualty underwriter. Then in 2017, he joined Hiscox, first as a medical malpractice development underwriter and then for the last four years as a senior development underwriter medical malpractice. And in 2024, he was awarded the Prize for Hiscox UK's underwriter of the year. So it's safe to say he knows a thing or two about medical malpractice, which is what we're going to discuss today. So Louis, welcome to the podcast. Thank you, Peter. It's a pleasure to be here. And before we get going, dear listener, I have a warning. In this episode, Louis and I will be talking a bit about medical procedures and other sensitive issues that some may find distressing, so please be careful. And with that warning in mind, we are here today to discuss insurance for medical malpractice. Well, it is who it's for, what it covers, that sort of thing. But let's start with a brief definition of medical malpractice. So in a sentence, and Louis, you were only allowed one sentence, please define medical malpractice. Fine. So in a simplest terms, medical malpractice describes a situation where a medical professional makes a mistake, which leads to avoidable harm to a patient. Brilliant. Okay. And I now have two related questions flowing from that. First, why is it called malpractice rather than negligence? And second, what's the difference between medical malpractice and clinical negligence? So they are used very interchangeably in the insurance market, and I will be completely guilty of that all the way through this podcast, so apologize if anybody out there. If we unpack the words, it's probably the best way to explain it. So medical means care provided by doctors, so typically GPs, hospital consultants, surgeons, that kind of thing. Now the word clinical means care provided by doctors plus a wider spectrum of healthcare professionals. Ah, okay. So nurses don't miss another's, okay? So malpractice then means bad practice, and really is an American kind of legal term for a wider range of misconduct, not just negligence, tends to deliberate misconduct, for example. So the negligence is the UK legal term, meaning a failure to, or failure of professional duty of care. So really in the UK context, clinical negligence is the more appropriate term. That's the UK legal term, that's the term they use in the NHS, and the insurance market though, we talk mostly about medical malpractice. Now why is that? Well, really it's because in the London market they export medical malpractice insurance all around the world, and medical malpractice is more of an internationally recognised term for what we in the UK would call clinical negligence. Brilliant. That was a much more fulfilling answer than I was expecting you just to say, you know, it's all basically just the same sort of thing, but no, that was brilliant. Love that. Thank you very much. So we're talking about doctors who do things wrong. So please could you give us some examples of the things which can go wrong? Okay, no problem. So the way I like to think about it, at the highest level, malpractice claims fall into two categories. So number one is failure of the clinician to resolve the patient's ailment. And number two would be during treatment, the clinician inflicts a new injury illness or causes death. So we take those in turn, failure to resolve the patient's ailment that they present with. Most common is probably misdiagnosis. So failing to accurately identify a patient's condition, failure to refer to it onto an appropriate specialist or maybe wrongly attributing symptoms to a minor illness. Something else we see a lot of is delayed diagnosis. So diagnosis gets made correctly, but because of avoidable delays, the patient's treatment doesn't start when they want it to start or when it could have started. So examples like cancer, obviously a big one, delays, if one knows delays in diagnosis of that means that the treatment starts later your prospects are reduced from that point. And if you take inflicting a new illness or injury, now thankfully this is, this happens a lot less than the category one, but it's things like pharmacists who dispense the wrong drug medication, which perhaps leads to an allergic reaction in the patient, a surgeon who accidentally severs of the wrong blood vessel, where they're operating on somebody or nurses who fail to turn patients around in bed, and that leads to pressure source, which can be very, very nasty, and I definitely recommend not googling that. Speckling. So we have acts of omission, where they fail to do something they should do, and we have acts of commission, where they do something that they shouldn't do in essence, is that a fair distinction? Yeah, it's absolutely, I mean, the difficult thing with medical malpractices, when you turn up to the medical practitioner's door, you already have a condition, because you were suffering along with you. So unlike a normal injury claim, let's take a car accident, for example, if you're driving down the road, you're perfect health, and then you're hit by another car, you're accident, your injuries very obviously caused entirely by that, when you're going to see the medical professional, you already have a condition, so the question then becomes, how much better should you have got, or could you have got, had you been seen quicker, or had different advice, or different treatment? Okay, so, who is it that buys medical malpractice insurance? Is it individual doctors, or is it there, the organizations that employ them? The answer to this one is both, so it's very true that organizations will have to have clinical negligence cover, medical malpractice cover, so a practice, a surgery, clinic, hospital, all those kind of organizations will have their own cover, and in the medical malpractice world, it's very, very common for particularly doctors, or higher-ranking clinicians, to have a personal policy, either in addition, or to cover their private work that they do outside of, working for their main employer. So what happens when there's, let's say, that there's a private hospital, which has insurance for its doctors, and a doctor has, either her own insurance, does that mean that there may be two policies of insurance when something goes wrong, potentially? Yeah, that's true, and this is quite common actually, so you will see often situations where the organization has cover, and so does the individual, often it just comes down to negotiations between the insurance companies, but who's going to pay it, and it's very sensible for an organization to have their own med-mount cover in case the insurers of the individual don't think it's one for them, they don't think they're insured, it was wholly to blame, and I think some of the blame should fall onto the organization, so there's usual belt embraces for both to have cover. Brilliant, okay, but what roles does it cover? So, medical malpractice, you said is doctors, whereas clinical negligence is broader than that, so if clinical negligence is wider, what other types of medical care is covered by clinical negligence? So, if an organization has come from medical malpractice or clinical negligence, however we're describing it, it's absolutely typical that it would cover the acts of surgery, the doctors, the senior medical staff, but also the support staff, so the nurses and the therapist, the back room staff, etc. There is actually an example that came to the Supreme Court in 2018 of a member of reception staff who was found to be negligent for a patient injury, and this was a chat who had been assaulted, we hit over the back of the head in unprovoked attack in 2010, his friend took him to A&E, which was incredibly busy at the time, he asked the receptionist how long it would take to be seen, and the receptionist told him would take perhaps four or five hours. Now, the truth was, the triage nurse would have seen him in about 30 minutes, and then maybe it would have taken him longer to see the doctor after that, but on the advice of the receptionist that it would take four or five hours, he went home to get his own pain killers. Now, a few hours later, he started to deteriorate, his family called another ambulance, he had neurosurgery to address an internal bleed in his brain, however it was too late, and by that time he'd suffered permanent brain damage. Now, when he got to the Supreme Court, they ruled that but for the negligent advice provided by the receptionist, a claimant would have been seen sooner, they would have had their surgery sooner, and they would have ended up with a full recovery. Wow, okay, so in that situation, the claim against the entity was because of. Bakedly someone who had no medical training whatsoever. That's right. Yeah. So the policy will respond to claims made by patients for injury, illness or death caused by negligence committed by you, the insured. So it fooled, it fooled in the insuring clause. I mean, that was an NHS claim. So I'm not sure exactly how they how they dealt with it and classified it, but it was paid and the guy did get get his compensation. Okay. I mean, that shows the width of cover provided by the policy then. So I mean, we're talking all the people who take your bloods and I mean, researchers who are doing tests on samples and whatever, if they get the test wrong, would that be covered by the policy? Yes. I think so. Yep. Wow. Okay. Chiropractors, dentists, is dentists covered or is that a separate policy? Yes. Yeah. Medical My Practice for dentists, absolutely. Okay. I say this because I'm having a tooth extraction tomorrow, so I just need to kind of prepare the way. Yeah. Always debate whether to tell the dentists. When they ask me what I do for a living, do you tell them that you're a medical My Practice insurer's professional? Do you wait to the end of the procedure? And I mean, we're obviously in the UK, but our doctors in the UK are obliged to have insurance. So yes, they are. For many, many decades, they've had a professional expectation to have cover. And if they don't, they could have faced regulatory investigation or a disciplinary action from the general medical counsel there, their regulator. This is all put on a statutory footing, about about 2013, 2014. So now are legally obliged now to have adequate and appropriate indemnity or insurance. And is that just people who are regulated presumably, that there are slightly off-piece doctors who provide medical loosely, broadly defined medicals, so alternative remedies, holistic remedies, things like that? Are they obliged to have insurance? So it's safe to say that anybody who's a regulated professional is obliged to have cover or to make sure their employer has cover for them on their behalf. When you get into the complimentary therapy space, if they are not regulated, it's not always necessarily they are obliged to have it. And I would say it's very, very available. His cost sells a lot of insurance, the complimentary therapy practitioners at very low cost, often it's usually one of the more low risk ends of the market. So they will typically have cover. And as we're basically in the UK, I think it might be helpful to explain what the, I mean, use the initials NHS, which is national health service, but explain to people overseas. I mean, we have 40% of our listeners are not based in the UK. So could you briefly explain what the national health service is? Because a lot of people around the world won't necessarily believe it's true. Yeah, right. So the NHS is a state run health service. So majority of the hospitals, GP practices, clinics all run by the NHS. Taxpayer funded, you can turn up and have your care delivered free at the point of use. Very few places where you have to actually pay any money out of your own pocket. It is one of the world's largest employers. I think they employ over 1.5 million people, which puts them up in the league with the Indian Railway, Walmart, McDonald's, places like that. So it's a big beast. They have indemnity schemes. So they have state-backed indemnity schemes. So if any doctors or any clinicians, medical professionals or receptionists are working in the NHS, they're covered by, they have seven state-back schemes that the biggest one, most well known, is the clinical negligence scheme for trusts. So clinical negligence, they use that phrase.medicalware practice because it's all UK. So yeah, it's a wonderful institution. They really are very few places in the world where it's better to be sick or injured than the UK because of the one for K you get from the NHS. Exactly. And once again, using my own personal story, I've been sliced open on three occasions because of the Crohn's disease. And I have paid not a penny for any of those operations or for the post-surgical care. And yeah, for which I am immeasurably grateful to the NHS. Okay, so the NHS provides this state-backed insurance, which is presumably kind of very good cover. But you said earlier that doctors can buy their own policies. And that's presumably because in addition to their NHS work, they also do private work that does not fall within the NHS scheme. So where do doctors go to buy their own insurance? So the main source for doctors historically has been the medical defence organisations. So these are mutual not-for-profit organisations run by doctors for doctors and they provide not insurance as such but an indemnity available pool of indemnity funds and legal experts to candle claims on behalf of doctors. The other places are to the commercial insurance market where I sit. So there's about 20 providers ish there and will provide insurance cover for them. So there's a few ways that they can get their insurance brilliant. And where does his cocks fit into all of this? Is your insurance through the medical defence organisations or is it completely separate? How does it all work? Yes, we're stepping into the medical defence organisations. But yeah, we target wholly private providers medical care. And so that's not to say we don't cover people who look after NHS patients mind. So some private providers have contracts from NHS trusts to provide some small part of their overall services. In that case, that's a private provider who needs insurance from the commercial market usually from providers like his cocks. Okay. And are you limited to the UK medical profession or do you like globally? So the team I sit on in London, yes, we target UK domiciled medical professionals and businesses. The wider his cocks global outfit does provide medical malpractice cover in other countries, particularly the USA. We have a team in Atlanta and across the US who does that and in some of our European offices are also doing it as well now. Brilliant. Okay. And your title is Senior Development Underwriter. For my education, Lewis, what is a development underwriter? Okay. So the simplest way I can describe this is an underwriter's job in the most simple terms is to evaluate customer risk, produce quotes and do an else. Okay. The development side of it is looking for new sources of quotes and customers. Okay. So a development underwriter kind of does both. Right. So always say you kind of need to be equal parts nerd and social animal to be a good development underwriter. Yeah. And that's how you describe yourself, is it? That is how lots of people describe me. Yeah. Okay. So let's talk about the scope of the cover itself. We've already discussed the fact that it covers negligence. So negligent acts and negligent omissions, things like that, wrong prescriptions, wrong dosages, failing to explain side effects or complications properly, all those sorts of things. A thousand other ways in which the medical profession can harm patients. But does it also cover things like regulatory inquiries, inquests and so on? So does come of those those things. So occasionally a medical professional will be asked to attend an inquest as a witness or sometimes as somebody might potentially end up with a negligence claim against them. So the policy absolutely covers legal defense costs to help them through that situation. And similarly, they're investigated by their regulator, professional body, the policy provides legal defense cover for that. So experts solicitor on your side to see through that scenario and try to minimize the chance that you might be struck off for face sanctions or any negative outcome like that. What about a situation where because doctors are used all the time as expert witnesses in legal cases? Does your policy cover that as well? But when they are providing evidence as a legal expert? Yes, absolutely. It needs to be something that you would add to your policy, but yeah, we would cover somebody to be a medical expert in a clinical negligence case or a general injury case. Often they're asked to provide petition on prognosis reports for the courts. So yeah, absolutely comfortable to cover that. Brilliant. Okay. And what does the policy exclude? So exclusion. So not a lot, if I'm honest, I guess the most notable things that you typically see are ones around, for example, professional sports treatment or professional sports people, particularly premiership footballers. So a lot of claims from professional footballers would end up being multi-multi-multi-millions because if you, I mean, Peter, take the example, you and I lost a big toe in an accident or in an operation that went wrong. We can still turn up and do our jobs in almost exactly the same way no problem. Okay, so there's not really a loss there. But if you're up front for Arsenal, there's a different story. So that type of claim that could put somebody out or end their career potentially would be a month. to multi-million pound claim, so medical malpractice underwriters, generally a bit nervous about professional footballists, but not instrumental. So how are they ensured, because presumably there is insurance for them, but where do they get insurance from? Or is it just the. The clubs would arrange that, yeah, and they have their own thing, they have personal accident policies as well, that pay out without any negligence claim. What about criminal acts? So I'm thinking of Dr. Harold Chipman, who was, I think, our largest mass murderer, a man who hastened the death of an estimated 250 victims. He was a family doctor, a GP, a general practitioner, so that the day-to-day doctor that the people go to when they have colds and sniffles and things like that. Anyway, are criminal acts like that covered by your policy? No, is that something that's excluded quite widely in the market or very widely in the market? So, I don't actually know what the insurance response was to the Chipman case, it was quite long way before I got into the market, but yeah, that is excluded by everybody, so I would have thought he would have struggled to get insurance cover for defending that scenario. I'm relieved to hear that, Lewis, I'm very relieved to hear that, and quantum. I mean, I appreciate this is more of a claims question than an underwriting question, but I mean, medical mistakes can obviously have devastating life-changing effects. So kind of presumably, this is an area of insurance where there can quite easily be enormous claims, enormous quantum. The scale of the damage is linked to the pain and suffering that the patient endures, also then the financial consequences and knock-ons from the result of the injury, or really honest that they're left with. So it absolutely varies from very small to very, very large, so generally, on the smaller end, if a patient has had a negative outcome, an negligently delivered by the medical professional, but they subsequently make a full recovery, perhaps with a second surgery or second round of treatment, for example, those claims tend to be a lot smaller, you know, in thousands or tens of thousands, perhaps. What we really look out for as medical malunderwriters is any situation where a patient could be left with a lasting injury, lasting impairment, something like an amputation or, you know, blindness or a mobility issue, something like that, particularly anything that could pin their ability to work, stowards a lot of the claims. The largest reported claims generally are about birth injuries, though, and I won't go too into this. This is the gruesome stuff, but generally, the biggest settlements, including the largest settlement to do with this, so I'll just give a brief explanation of one of them. So the largest reported claim, if you look at someone Google, was a 37 million pound settlement, and this is for a mother and baby that were in labor, the baby was in the breach position, which means feet first and in the wrong way round. It wasn't spotted quickly enough, the baby's oxygen was deprived for too long, and this left the baby with long, complex life changing, brain damage. Oh wow. Okay, so we have these horrific claims, but in general, are you seeing an increase in losses? I mean, obviously in the US, claims payments are increasing because of social inflation, which is the term used to describe the way that insurance losses are increasing way ahead of ordinary inflation rates. Oh, and anyone interested in that particular topic, social inflation, should listen to our two episodes with Mark A.D. of Crumb and Forster back in May 2024. Balloons. Are we seeing anything similar happen in the UK? So I'll listen to episode. It's very interesting. Yes. You guys spoke a lot about the jewellery trials in America and how liability and quantum crucially can be set by juries by groups of laypeople. In America, you obviously see lots of large medical malpractice settlements that go into the multi-million, so that the juries are kind of conditioned in a way to think that personal injuries are worth millions and millions. That's nothing not how it works in the UK. The quantum is set by the judicial colleagues guidelines and by judges who follow that. So if I want to say I don't use too much sleep about social inflation, but back to your question about whether we're seeing increasing claims, not so much. I was looking at some of the NHS statistics earlier in the week. Their claims numbers, they do go up every year, but not by a huge amount probably related to the rise in the population. So yeah, still something we are particularly worried about at the minute, large increasing claims. Good. Medical malpractice is obviously a hugely personal area of insurance in that the impacts of the underlying problems are felt by individuals. The claimants are individuals who have had their lives affected and the defendants are individuals as well. We're talking kind of doctors. I mean, that case you talked about, the Supreme Court, it was ultimately a receptionist an individual who now has to carry that. And when you're underwriting these risks, I mean, how aware are you that your decisions have the potential to affect individual lives for good or for bad? Absolutely. Yeah. I mean, there's obviously a huge technical element to medicine and to law and to the insurance claim and all that kind of stuff that you have to be aware of as an underwriter. But yeah, absolutely, we're completely aware that at the end of the day, at the end of every claim is somebody who suffered pain or distress or hardship as a result of some injury on this that they've suffered or perhaps the death of a loved one. On the other side, you're insured, the medical professional, if they're being sued, that's some very unusual situation to be in. It's very stressful. Your professional reputation is on the line. So it can be very stressful and have a big impact on the individual. So for an underwriter, I see my job was making sure that the cover matches the risk perfectly so that all the scenarios with many as possible are covered. So when the insured needs the policy to respond, it's there. So they've got an expert in their corner to look after them as to go through the process. And so they don't face financial ruin if the claim doesn't go their way. And similarly for the patient, there's a pool that funds there then to pay the compensation for their injury as long as the cover's right. So again, that's an important consideration when we think about mal risk, absolutely. And are there any other big issues, big burning issues in the world of medical malpractice at the moment? So the one that really is interesting me at the moment is the interplay of a few kind of societal mega trends. So I'll list those out. So aging population got a lot to be said about that. A little bit less is said about the fertility rate, the falling, some say collapsing fertility rate in this country, and then the NHS backlog. So the combination of those three things in terms. So with aging population, the population over 65 in this country is around about 19 percent of the population, 12.7 million people are the minute. In 50 years, that'll be 22 million people, 27 percent of the population as projected by the ONS. Now at the same time, the workforce is set to shrink because the birth rate in this country has gone from about 1.9 as recently as 2011, it's about 15 years later now to 1.4. So just a minute. So we should say one point in order for the population to stay the same, the birth rate needs to be two. So as soon as it drops below two, the population is going to come down. So 1.9 is not great, but 1.4, I mean that's very low. Yeah, 1.4 is the average number of children per woman in society. So at 1.4, your next generation is 30 percent smaller than the one that went before it. So it's quite profound, and this is happening all over the world by the way, apart from sub to the higher and Africa. It's really quite start when you look at it. Now what does it all just mean for healthcare? Well, we've soaring demand from older people. The more older people you have, the more complex, chronic, multiple type health conditions that the health system is dealing with. And if you take the statistics on GP appointments, for example, the average person under 65 will have three GP appointments a year, what over 65 that goes up to six, over 75 that goes up to nine. So the demands on the healthcare system are set to soar with age in population. At the same time, you've got this workforce decline and the number of people coming through into the workforce. So what this could lead to in the mid-mouse sense is lots of increasing demand for healthcare, lots of stress on the system. And like in any walk of life, the more pressure you're under, the more mistakes you're potentially going to make. So we could see quite a big spike in male practice claims in the future, potentially. Although this is quite a long way off, and then policy levers to pause, try and correct some of these trends, but it's the main thing I've got my arm at the minute. And as we approach the end, Lewis, what do you think the future may hold for the insurances of medical malpractice? So in the future ever to. going to have to grapple with AI. At the minute there was really any case law around the issue of if an AI has made a decision or part of a decision on a patient's case, who's responsible for that. It's likely that it's going to fall somewhere between the clinician, the manufacturer, producer of the AI software. So that'll be an issue that we will be grappling with in the coming years, probably very, very soon. So finally, Lewis, at the beginning of this conversation, I asked you how you got into insurance. So let's end with the related question. Do you feel as though you made the right decision? I thought you could ask me how are you going to get out of it? Yes, I do. I think it's been a wonderful career. For me, intellectual stimulation is phenomenal in the industry. So medical malpractice, underwriting, sits at the confluence of medicine, law and insurance, three highly technical disciplines. So to grapple with all three, you know, if you're an intellectually curious person, it's just an absolute feast and you'll never exhaust it in your whole career. So yeah, for me, it's been a great move and yeah, look forward to many more years. Thank you, Lewis. That was wonderful. Thank you so much for your time. RPC Radio. Thank you so much for listening to Insurance Covered, which is an RPC production made possible by Joe Burgess and Mary Mitchell. If you enjoyed this podcast, you'll also love our other RPC podcast, taxing matters, money covered and the work couch. Thank you once again for listening and I hope you have a great day.